Carmex Essay

Carmex: Maintaining Price
Jason Waddy
Park University

Abstract
The organization Carmex introduced their brand in 1937 and is still thriving today. For any organization to be around for a sustained period of time, the product must keep up with the times while maintaining a familiar image. It is a very competitive market in the lip balm industry and Carmex needs to continue to keep that special image in order to continue to sell its tried and true formula that’s worked after all these years. If that’s not enough, the price must also be competitive with the other competitors. As mentioned, costs are always a challenge that an organization constantly looks to decrease in order to drive profits. Higher sales volume certainly help with this goal therefore Carmex needs to keep the product popular among consumers. Given how technology has improved, advertising has become more efficient today than ever.

The Carmex Product

In the beginning Alfred Woelbing started creating lip balm to help cure his lips of dry and soreness. After finding the right process and ingredients, Alfred decided to visit pharmacies and sell to them and include 12 free jars along with a post card for repurchase. Alfred, sold his rights to a previous lip balm called, “Lyptone” and used that money to start Carmex in 1937. This product was superior to the Lyptone as one of the key ingredients used was lanolin. However, World War II (WWII) begun during that time and the ingredient lanolin became scarce. The Army needed it to keep vehicles/supplies lubricated and prevent rust. Luckily the war ended soon enough for Alfred to continue producing the Carmex lip balm and keep costs down. Like all successful organizations, Alfred had a problem businessmen like to have. The brand became popular and needed to upgrade his operation to produce more of the product. Carmex was moved to Wisconsin in 1973 as this was a prime location for a factory at that time. Over the years, the container for the product changed but stuck with the red, white, and yellow look as it stands out in a store and is instantly recognized. It was not long before the product was in a small tube that could be squeezed out like most lip applications today (carmex.com, 2018). Today the brand is “ranked Carmex the #1 recommended over-the-counter lip balm brand” (Carma Labs Inc, 2017).
Today, Carmex is atop the industries manufacturers for lip care; others include Blistex, Burt’s Bees, and Chapstick. In order to meet demands of their customers, feedback is important in order to provide updated products.
Promotion technique
The most synergistic method of advertisement currently is social media. It only makes sense that Facebook is a tool that Carmex uses to enhance their appearance as it is a, “useful tool for: building relationships” (O’Neill, 2009). One of the reasons why Facebook is an efficient tool for organizations to reach their customers is that the search features are very precise. Facebook users often add a lot of personal information about themselves that help companies show off products to them based on all these variables. It even connects to what you like from previous searches and includes those ads to make it more convenient for the consumer. This social media tactic as made Carmex popular on the Facebook scale totaling around a million likes and followers in the United States, which is quite a challenge. A study by Elon University was conducted to find out why people liked and or follow Carmex. The popular answer for the customer loyalty was that they just, “love the brand and plan on being that way for a long time” (Bushelow, 2012). Having devoted followers is good as it equates into loyal customers for years to come and is a self-promoting method for the brand.
Product launch
A great way to find out what consumers want is have a poll on social media (Facebook). This poll should be a post of Carmex’s new product packaging with two or three options for which flavor lip balm should come out. Holding a decisive poll is more efficient as it is, “quick, anonymous, and will drive more people to vote” (Kerin & Hartley, 2017) To motivate consumers to participate, offer an incetives like, “enter to win a Carmex deluxe care pack by choosing which flavor lip balm you want. Also redeem a coupon for a buy one get one free tube of Carmex.” So many objectives are being accomplished in a single post; advertisement, product selection, and a potential for customer loyalty. If Carmex ups the stakes for a second round of a flavor selection consumers will likely not participate as much which is why the organization should offer an all-expense paid cruise with a kicker of purchased products provide more votes for a single person, increasing their chance to win. There are advantages using this tactic such as, “access to individuals in distant locations, the ability to reach difficult to contact participants, and the convenience of having automated data collection” (Wright, 2005). However, playing devil’s advocate, these surveys have drawbacks like, “uncertainty over the validity of the data, sampling issues, concerns surrounding the design, implementation, and evaluation of the survey” (Wright, 2005).
Ultimately, Carmex wants to increase their popularity on Facebook to increase profits. The poll will certainly have an impact on that goal and the organization will gain a lot of information about their customer from the poll by obtaining users demographics (Beckles, 2015). Finding out who the winner is for social media contest, there are software applications that are able to pick out the users and tally their scores. The program can determine a like, share, and friend recommendations which will increase on a point scale. This program usually also has an electronic lottery system in order to announce a winner if that is the style of poll considered (Ross, 2016).
Evaluating Product Pricing
Pricing products are very important and can make a huge impact by slightly increasing price such as a one percent gain.

Carmex needs to be comparable to the competition but also value their product appropriately. The organization’s pricing should also create value for the customer such as purchasing a higher volume will cost less than smaller purchase for example one small tube could cost $1.50 and one that has 1 oz more (almost double) is $2. It can also work in quantity such as purchasing a box of 5 for example. It simply depends on the customer and if only a small convenient tube is desired or if saving money is more important. There are many different types of customers and meeting everyone’s needs is the goal for an organization. This can increase profits for Carmex as some customers might visit a store looking to only purchase one tube but see the box of 5 (which is cheaper per unit) and get that instead. Sure Carmex isn’t making as much per unit but still selling their product of at least a one percent gain is a

success.
Another highly effective way to increase revenues is lowering production costs. This is a goal that every organization should look to constantly improve upon. Without sacrificing quality, this is a challenging goal. However once achieved, the organization is able to increase revenues and can lower their prices.
Carmex needs to always focus on building a loyal customer base. Values are one main reason why customers stick with one organization. The Carmex value is to, “Value our family and our community. Working together is the best way to ensure the best result” (Carmex, 2017). Increasing revenues will help to produce their products at a lower cost to the customers. Utilizing avenues such as social media to gain customer interest and involvement is one major way to get there. Keeping customers involved with the evolution process will help the organization meet consumer needs and maintain loyal customers. If Carmex decides to continue researching new ways to appeal to their customer, the Carmex brand should be highly competitive in the industry.

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Bushelow, E.E. (2012). Facebook Pages and Benefits to Brands. The Elon Journal of Undergraduate Research in Communications, 16.

Carmex. (2017). The Carmex History. Retrieved from: https://www.mycarmex.com/history/

Kerin & Hartley. (2017). Marketing. New York, NY: McGraw Hill Education.

O’Neill, N. (2009). 10 Rules for Advertising on Facebook. Retrieved from: http://www.businessinsider.com/10-rules-for-advertising-on-facebook-2009-7

Ross, K. (2016). Social Media Matters: 5 reasons contests, promotions make sense. Retrieved from: https://www.bizjournals.com/kansascity/news/2016/09/09/social-media-matters-5-reasons-contests-promotions.html

Wright, K. (2005). Researching Internet-Based Populations. Retrieved from: http://onlinelibrary.wiley.com/doi/10.1111/j.1083-6101.2005.tb00259.x/full